Environmental Incidents and the Market Value of Firms: An Empirical Investigation in the Chinese Context

CKY Lo, CS Tang, Y Zhou, Andy Yeung, D Fan

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We examine firms listed on the Shanghai/Shenzhen Stock Exchange to investigate stock market reactions to 294 Chinese manufacturing firms involved in 618 environmental incidents between 2006 and 2013. Through our event studies, we find empirical evidence of a significantly negative stock market reaction to announcements of environmental incidents. Our empirical analysis reveals that Chinese firms with a higher government share (of ownership) and recognition of social responsibility tend to be less affected by such incidents; however, Chinese firms with stronger personal political ties (i.e., top management teams or board members with concurrent or prior government appointments) are actually affected more when environmental incidents occur. Moreover, environmental incidents caused by Chinese firms can have a significantly negative impact on the market value of their overseas customers.
LanguageEnglish
Pages389-600
Number of pages211
JournalManufacturing and Service Operations Management
Volume20
Issue number3
Early online date11 Apr 2018
DOIs
Publication statusE-pub ahead of print - 11 Apr 2018

Fingerprint

Empirical investigation
Market value
Incidents
Chinese firms
Stock market reaction
Government
Shenzhen
Ownership
Event study
Top management teams
Empirical evidence
Stock exchange
Social responsibility
Announcement
Manufacturing firms
Empirical analysis
Shanghai

Keywords

  • environmental incident
  • China
  • stock market reaction
  • supply chain
  • social responsibility

Cite this

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Environmental Incidents and the Market Value of Firms: An Empirical Investigation in the Chinese Context. / Lo, CKY; Tang, CS; Zhou, Y; Yeung, Andy; Fan, D.

In: Manufacturing and Service Operations Management, Vol. 20, No. 3, 11.04.2018, p. 389-600.

Research output: Contribution to journalArticle

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